EXTENDED FUNCTIONS OF NATIONAL FILM FINANCE CORPORATION (Hansard, 2 March 1970)

§ Mr. Silvester
I beg to move Amendment No. 1, in page 1, line 7, leave out 1980 ' and insert '1975'.
The purpose of the Amendment is to substitute 1975 for 1980, which would mean that the renewal of the powers of the National Film Finance Corporation would run for five years, not 10 years.
We have had a lot of discussion about the corporation, both on Second Reading and in Committee, and I do not propose to go over all that again. However, the hon. Lady will be aware that out of all the discussion emerges a clear difference between us. She is happy for the corporation to continue in its accustomed wav with some additional powers, hoping to make it more commercial in its operation. We on this side look forward to the day when we will see it taken over, not necessarily as a corporation but its functions, by the substitution of normal private risk capital in the industry. We do not say that that day is immediate, but that it is something which can he worked for and for which the corporation can help to work.
We should not say that because we set up the corporation in 1949 it should 196 necessarily go on for all time. We would hope to see something happening before 1980. This is prolonging the corporation for 50 per cent. of its actual life; it is a major extension. I have been looking up previous Acts. The original 1949 Act set up the corporation for five years, the 1954 Act for three years, the 1957 Act for 10 years, the 1966 Act for three years, and the Bill proposes 10 years.
The 1957 Act, which extended it for 10 years, was based on continuing it under its existing format. The powers were, roughly speaking, the same under that Act, although it was hoped at that time, because power was written into it for a private company to take over, there would be no change in the powers under which the corporation operated.
In the Bill, we are substantially altering the powers of the corporation. I say "substantially" because, although the powers extended under Clause 1 may seem to be limited—and I am not sure about that—the purpose behind the changes is to give the corporation a new look, a new kind of commercial attitude. Therefore, it seems reasonable that the House should seek a way of discussing how far those powers have got before 10 years are up. The main purpose of the Amendment is to bring us more in line with the extension of the corporation that we have had in the past and to give us an opportunity to see, after five years, how far it has gone.
I remind the Minister that the new powers are not to be sniffed at. They include the completion guarantee, a power of distribution, a power to buy copyright and, therefore, to seek out new film material, and a power to make and join new companies. It is, therefore, reasonable for the House to say, "Here is the Corporation being given extensive new powers." The hon. Lady said that it is seeking new pastures, hoping to conduct itself in a new way. It is reasonable that we should ask for this matter to be considered again in five years' time.
Whether a period of five years will upset the corporation, I doubt. Historical precedent seems to show that five years is a reasonable enough period for the corporation both to make a good showing—it is not too restrictive a period—and to show its paces. I understand that the average length of time to make a film is between 18 months and two years. 197 We are giving the corporation plenty of time to show the way in which it would seek to operate over a reasonable number of new films.
I hope, therefore, that the hon. Lady will look favourably upon the Amendment. It does not weaken the powers of the corporation. It does not alter the difference between our sides as to what we think the Government should do in the long term, but it provides the House and the industry with an opportunity to look at the situation afresh in five years' time—a reasonable period—in order to see how far it has got and how far these powers are required in the future.

§ Mr. John Nott (St. Ives)
I support the Amendment, but I go further than my hon. Friend. I did not have the pleasure of serving on the Committee; nor did I speak in the Second Reading debate, but I can see no conceivable reason—as a Conservative back bencher—for bringing forward the Bill. Where shall we stop? Why should the taxpayers produce El 1 million once again for the British film industry—

§ Mr. Deputy Speaker
Order. The hon. Member is making a Second Reading speech. I hope that he will relate his remarks to the Amendment.

§ Mr. Nott
Certainly, Mr. Deputy Speaker.
We are discussing the extension of the provisions of the Bill to 1980, and I wish to give a few reasons why I think the provisions should be extended to 1975 and not to 1980. I see no conceivable reason why the taxpayer should be asked to find £11 million to support the British film industry, any more than he should be asked to produce money to support any other prosperous industry. It is not as though the film industry is unhealthy at the moment; on the contrary, it is prospering very well—

§ Mr. Deputy Speaker
I find some difficulty in relating the hon. Member's remarks to the Amendment, and the question whether the Bill should extend to 1980 or 1975.

§ Mr. Ridley
On a point of order. Surely it is impossible to discuss the question when the corporation should come to an end unless one is prepared to adduce reasons why it should be one year instead of another.

§ Mr. Deputy Speaker
It is in order for an hon. Member to make an incidental reference, but in discussing this Amendment we cannot embark on the whole history of the film industry.

§ Mr. Nott
I understand that we are discussing the possibility that the taxpayer should provide £11 million stretching over a period of years until 1980. I am merely advancing the view that this is a thoroughly unreasonable proposition, and that it is adequate and reasonable to advance these moneys only up to 1975. The British film industry is quite healthy at present. The Americans are producing plenty of money for the industry, and if we have some nationalistic reason for deploring the fact that Americans are putting money into the industry rather than that the money should be coming from British sources we should say so; and say, too, that there are some reasons of nationalism for not wishing American money to flow into the industry.

§ Mrs. Gwyneth Dunwoody
The hon. Gentleman has said that he did not take part in the debates on Second Reading or in Committee, but the Bill has been available to hon. Members for a considerable time. The Americans are at present taking money out of the British film industry, and this fact was referred to many times during those debates. That is why we need the National Film Finance Corporation to continue, not because we are anti-American.

§ Mr. Nott
I fully understand that there is some remote threat that the Americans might take their money out of the British film industry in the period up to 1980. In the short term, the Americans may be reducing their investment in the British industry, but the Government are now seeking money from the taxpayer for 10 years ahead. If the hon. Lady is seeking £11 million from the taxpayer because she is a little concerned lest, over the next 10 years, the Americans might continue to withdraw money from the British film industry, she is making a judgment which I do not share.
I believe that the Americans will continue over the medium and the longer term to put money into the British film industry, because we have in this country a unique collection of art directors, film makers and actors which the Americans will continue to wish to support.
199 Whether we continue with the levy, whether we continue with Eady money, and whether we continue with the N.F.F.C. up to 1980—or, as I urge, to 1975—the British film industry will remain healthy, and there is no indentifiable reason for agreeing that this public money should continue to be invested in the industry up to 1980 in the circumstances which now prevail.
If there is a fear that in some way the Americans might lower the standards of British films, if it is suggested that there was reason to suppose that the Americans are in some way more philistine than the British, that they are more profit-orientated, and their influence in British films is rather to be deplored, that would be an argument. If there is a reason for subsidising the British film industry until 1980, or 1975, through an Arts Council grant, so that we might make art films which, though non-profitable, perhaps, are of interest to the British public and have, perhaps, some export content, that would be an altogether different matter.
I should have no objection to some sort of Arts Council grant to support the British film industry on that ground, but to suggest that the British taxpayer should continue to pay out £11 million up to 1980 for the British commercial film industry is utterly unreasonable.
I am a member of the Conservative Party, but I am not necessarily a supporter of its official point of view in this instance, because I regard it as wrong that the taxpayer should be called upon to put this sum of money into the British film industry at this time. There is no crisis in the industry. In 1949, when the National Film Finance Corporation was established, there was a crisis in the industry, but there is none now. There is just a fear that the Americans will continue, as in the recent past, to withdraw some money out of the industry.
I deplore the Bill. If there is a reason for a subsidy from the Arts Council, fair enough. But I support the Amendment. Up to 1975 is quite long enough—far too long, in my opinion. It is high time that the Government stopped taxing citizens to subsidise industries which are well capable of standing on their own feet.

§ Mr. Ridley
I rise now because I consider that a recent observation by the 200 hon. Lady should be pursued. When intervening in the robust speech of my hon. Friend the Member for St. Ives (Mr. Nott), with a great deal of which I agree, she said that the reason the N.F.F.C. had to be continued was that American money was leaving the industry.
11.30 p.m.
We do not know the extent to which American money is leaving the country. There has been a temporary outflow of American capital from the industry. I suspect that it is temporary and not as big as is sometimes alleged. But, without bothering to go exactly into the rights and wrongs of that, I would ask whether if the American money flows back or there is a satisfactory rate of business for the film industry it means that the Government would feel that the N.F.F.C. will no longer be necessary.
The hon. Lady based her argument on the fact that the American money is leaving. If it comes back, presumably we shall no longer need the N.F.F.C. I am sure that within five years' time there will be plenty of money available for making British films. It may be American money; it may be British money. It is impossible at this stage to tell which it will be. But I am certain that, whatever happens, if investment is withdrawn from such a field, then, like a phoenix arising out of the flames, new sources of finance will be provided, and that if there is profit to be made and business to be done somebody will put up the money for British films.
That is why—perhaps this goes some way to meet my hon. Friend's point—we do not believe that the N.F.F.C. needs a life of longer than five years, because the moment will come when the next Tory Government will be able to dispose of its assets or in some way phase out its operations at a time when there is plenty of money about.
I should be glad to have the hon. Lady agree that this is the right thing to do. We do not need 10 years. It is kind of her to offer us until 1980 to put the matter right, but I think we shall be able to do it by 1975. So I should have thought that the hon. Lady could well have accepted the Amendment that my hon. Friend the Member for Walthamstow, West (Mr. Silvester) moved so gently and cogently.
201 I emphasise that there is no long-term case for taxpayers' subsidies to the film industry where it is behaving commercially. We shall try to disengage taxpayers' funds from this activity at any time when it seems suitable. I hope that my hon. Friend will feel that what I have said goes some way to meet his point, but I think that the hon. Lady will also realise that she has a case to make out for the continuance of taxpayer finance for a commercial industry which is devoted solely to entertainment and leisure for a 10-year period ahead, which, as my hon. Friend said, is a very long time.

Mrs. Gwyneth Donwoody
I find the Amendment interesting, but not very believable. I listened with great attention to the hon. Member for Waltham-stow, West (Mr. Silvester).
The Bill seeks to prolong for another 10 years the operation of the quota and levy legislation and, at the same time, the period of the loan-making powers of the N.F.F.C. The Amendment seeks to discriminate against the N.F.F.C. by prescribing a five-year span. It would go a long way to defeating the purpose of the operation. It takes a long time to make films.
The hon. Gentleman said that it takes 18 months and that, therefore, within five years it should be possible for us to examine the question again. I do not accept that. To promise only a short-term future for the corporation would undermine confidence in the corporation and in investment in British films, which is the last thing we should want to do at a time when the City is showing growing interest in this field, an interest shown only since discussion of the Bill began in Parliament, when it was obvious that the N.F.F.C. was to continue in being.
The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said I spoke of "the only reason". I said that one of the reasons for the N.F.F.C. was that it was a form of insurance.
I must take up the extraordinary speech of the hon. Member for St. Ives (Mr. Nott), who said with great clarity—and I must draw his attention to the fact—that the Government should not support any industry. I should like to know whether that is a view he holds of the industries which the Government 202 support in his own area. I can assure him that there is a very radical difference. The Government use their powers in one field to assist industry to create jobs, and they use this other sort of power as a loan-making power for a commercial purpose.
Without in the least wishing to be unkind to the hon. Gentleman, I would say that if he had bothered to read the Second Reading debate, the proceedings of the Standing Committee, or had listened to the earlier speeches this evening, he would have realised that this was precisely the difference; that we are setting up loan-making powers because this unit is needed to assist our industry as a whole.

§ Mr. Nott
I have read the Second Reading debate, but the Bill entitles the Government to make advances of up to fl 1 million, as well as to provide loan facilities. That is my point.

§ Mrs. Dunwoody
As far as I can gather, the hon. Gentleman really believes, by supporting his hon. Friends, that the £11 million should be available in five years instead of 10, and argues that this protects the taxpayers' money. If we did not believe that our proposal was the means of protecting that amount of money we should not be seeking these extra powers.
But, as I have no desire, Mr. Deputy Speaker, since you have been so very kind, to go too far beyond the Amendment, I must say that I believe that the extra five years are necessary. The hon. Member for Cirencester and Tewkesbury has made great play of what he will do when he and his hon. Friends are in office. He may have the opportunity to discuss that after 1980, but certainly not before.

§ Mr. Ridley
I beg to move Amendment No. 2, in page 1, line 23, leave out "have power to".
The Amendment involves what is almost a drafting point, though the hon. Lady may not so view it. Clause 1(2) gives the N.F.F.C. power to give a guarantee in relation to a film for which it has power to make a loan. That matter was discussed in Committee, and is not now at issue. But the subsection actually gives the corporation power to make a 203 completion guarantee in respect of any film for which it has power to make a loan.
The curious thing is, and the hon. Lady gave a quite categorical assurance about this in Committee, that the corporation will only give a guarantee … in respect of films in which it has a financial interest, to give these guarantees itself or to enter into a joint arrangement with other parties to the financing of the film, to do so."—[OFFICIAL REPORT, Standing Committee G, 12th February, 1970; c. 5.] The hon. Lady has, therefore, said without equivocation that the N.F.F.C. will only guarantee films in which it has put its own money, and the Amendment seeks to bring the Bill into line with her words.
I do not here wish particularly to restrict the corporation if it is not to become an insurer of budget cost, which is not the intention of either side of the House, but it would be right to limit its activities to guaranteeing films into which it has put its own money. So, by accepting the Amendment, the Minister will have the pleasure not only of bringing the law into line with her own words, but of conceding to the Opposition the first Amendment of many that they should have been granted.

§ Mrs. Gwyneth Dunwoody
The Amendment seeks to limit the powers of the corporation to give completion or distribution guarantees to films in respect of which the corporation makes a loan. I think that it arises from a misapprehension about the nature of the corporation's future activity. I wish to emphasise that neither the essential nature of the corporation nor its main functions and duties will be affected by the Bill. Its essential purpose will continue to be to lend money to makers of British films and the overriding duty to pay its way will remain. The new powers the Bill seeks to confer are designed the better to enable the corporation to fulfil this task.
Circumstances may arise from time to time in which the availability of these powers may enable the corporation to take advantage of a situation in a way which will enhance its chance of making a profit or at lest avoiding a loss. I think that we all agree that we want it to be more commercial. En Committee, the hon. Member for Walthamstow, West 204 (Mr. Silvester) was good enough to say that he and his hon. Friends wished the corporation all the best in the world and hoped that, when it was next discussed, we should be able to speak of a success story with which we could all be happy. I am grateful for those good wishes and share his hope. The chance of success would not be enhanced, however, by intentional restrictions on the scope of the corporation's activities.
The hon. Gentleman said, too, that, in the event, all would depend on the way the corporation interpreted these powers. Again, I entirely agree. It will, indeed depend on the judgment of the board of the corporation, but I think that he will agree that it would be unfortunate if the corporation were unduly hampered by too rigid a restriction on what it can do. If, in the judgment of the corporation an opportunity to use the new powers profitably should arise, a restriction on its powers in the way sought by the Amendment would not be conducive to wards the happy result we all wish to see.

§ Mr. Ridley
Why, then, did the hon. Lady make the categorical statement that she did in Committee? She said: One of the objectives of this Clause is to enable the Corporation, in respect of films in which it has a financial interest, to give these guarantees…"—[OFFICIAL REPORT, Standing Committee G, 12th February, 1970; C. 5.] Why did she restrict the powers in those words when she is not going to restrict them in the legislation?

§ Mrs. Dunwoody
As I also explained in Committee, that is precisely the situation we foresee, given our present knowledge. What we are anxious to do is not to restrict the corporation should it find itself in future in a situation where the present commercial unit, which provides the sort of completion guarantee we were discussing, should for any reason cease to exist. This point was discussed at great length in Committee and I must ask the House to reject the Amendment.

§ Mr. Hay
The hon. Lady has lapsed back into the form she was in about an hour ago before the light of sweet reason dawned on her and she realised that she might make better progress with the Bill by accepting that we were trying to put forward reasonable arguments. I do not think that she has answered the point here. As my hon. Friend the 205 Member for Cirencester and Tewkesbury (Mr. Ridley) said, the hon. Lady herself said in Committee that one of the objectives of the Clause was to ensure that the corporation would give a guarantee only in respect of films in which it had itself a financial interest.
The Amendment is consistent with that and is intended to make it clear that the type of guarantee referred to in subparagraphs (a) and (b) of subsection (2) must be limited to cases where the corporation itself has money invested by way of loan. Otherwise, the thing is wide open. It would be possible for all sorts of things to be done by way of giving guarantees where the corporation has no money at stake at all. I am sure that this is not what any hon. Member contemplated and I can hardly believe that, at this late stage it is in the contemplation of the Government.
I urge the hon. Lady to look at this again. There is a genuine point almost of drafting. We have to get it right. As the Clause stands, the power given will be so wide that a situation could arise in which guarantees could be given where the corporation had no money involved, and I am certain that that is not what the House ever contemplated.

§ Mr. Silvester
It is sad to oppose the hon. Lady, since she has so kindly quoted another of my speeches in Committee, although not on this issue. However, it is a little silly of her to resist the Amendment. The only reason which she has advanced is that the Clause would enable the corporation to do something which would enable it to make or a profit or avoid a loss. I cannot conceive of a situation in which that would arise, unless the corporation itself had money invested in a film. It is up to the hon. Lady to state on just what occasion this could arise, unless the corporation is going in for running completion guarantees as a business in its own right.
Clearly, that is not the hon. Lady's intention or our intention, and it has nothing to do with the statements in my speech about the corporation being a thoroughly good commercial concern. This power does not fall within the normal ambit even of a distributor, for a distributor will guarantee only his own films. It is silly for the hon. Lady to 206 be so obstinate when the corporation is not moving into this business.

§ Mr. Ridley
Does not the hon. Lady intend to reply to the strong criticisms made by my hon. Friends on a simple and minor matter? No one is trying to restrict the powers of the corporation in any sense other than that in which the hon. Lady agrees it should be restricted. In Committee, she categorically agreed that the powers of the corporation were not to be used for guaranteeing films in which it had no financial interest.
As my hon. Friend said, there is no conceivable financial motive for the corporation wanting to guarantee a film on which it has spent not a penny piece. So far as I can see, the hon. Lady agrees with that basic proposition; my hon. Friends agree with that basic proposition; the corporation agrees with that basic proposition. It is all on record in HANSARD. Will not the hon. Lady make this small change in the law to give us what we want?
I know what is in the hon. Lady's mind: she thinks that National Film Finances may fold up and that the National Film Finance Corporation can move into the business of guaranteeing completions. This would be an extension of the use of public money. It would be something which the Opposition would not like. What the hon. Lady is really doing is resting on a weak argument so as to leave open the way for a sort of further infusion of the State's money into this industry.
We believe that there is far too much penetration of the State into the film industry anyway. Unless the hon. Lady is prepared to accept the Amendment, I may feel inclined to advise my hon. Friends to press it.